Nintendo market analysis

Q1. Conduct a 4C's Stakeholders Analysis of Nintendo in 2006

Customers

In 2006, Nintendo believed in a consumer market that distanced itself from gaming. It
had a belief that existing games were difficult to play and understand and very complex in terms
of operations. Their games emphasized fantasy with the major target being males (18+). They
wanted to create a new consumer segment by encouraging non-gamers to enter into this sport.
Concentration in the market was real life and simplicity game scenarios. Wii was designed and
marketed as a devise for family entertainments that involved all gender and age groups. This
included even those who like watching others as they play. It's not only young family members
who were encouraged to buy gaming devise but also the younger generation. Wii and the way it
was marketed managed to overcome a traditional negative barrier between "the parent" and "the
child (Oppapers.com, 2010, p. 1)." There was a competitive edge that was realized for the female
consumers. Casual gamers who were the main target in their strategy by then were influenced to
enter into this market.

Company

This company has been fighting for its survival since the entrance of new players Sony and
Microsoft. For three consecutive years since 2004, sales for Nintendo remained static. Vision on
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new leadership has been on the testing scale. The best change was manifested during launching
of Nintendo Wii in 2006. Financial results shows there have been a tremendous growth and this
is expected to triple in future. There has been a rise in stock received by customers.

Competitors

Main competitors are Microsoft and Sony. Sony had been delaying release of its PS3.
Sony PS3 was released one year after Microsoft's Xbox 360. This was also within a week after
the launching of Nintendo's Wii. However, for Sony the results were not encouraging. Sony lost
its dominant position in this console market mainly to Nintendo because the price tag was high
and there were problems in its supply. Microsoft launched Xbox 360 in November 2005 and this
was only a few months before their arch rivals Nintendo and Sony. Microsoft was using this
strategy after Sony PS2 had captured the market by entering the market earlier than its rivals,
Nintendo and Sony. However, the original Xbox for Microsoft had been a flop in Japan. The
previous approach in the market for Microsoft (off-the-shelf parts) had been abandoned because
there was lack of flexibility compared to its competitors. Much of the flexibility enjoyed by
Nintendo and Sony was in costs reduction and increase in profit margin. Another major
weakness for Microsoft's Xbox was that even though it was considered a success, a good number
of the 18 consoles to be launched were sequels. A major indirect competitor for Nintendo is
Apple's iPhone. The strength of Apple's iPhone made Nintendo to experience a 66% quarterly
fall in operating profit. These competitors are influencing Nintendo to make changes in its
strategy to introduce even more products that are appealing to the consumers.

Community

Nintendo amusement park is itself a collaborator of Nintendo. It is a physicallyaugmented
reality where props, mechanical systems and objects are used in transformation of the
Midterm exam 3
real world to a fantasy. Creators of Nintendo amusement park are seeking Nintendo and Disney
to be their collaborators so that they can take their prototype to another level. In fact, students
have been using Nintendo name together with the trademarked characters. The reason why
students have not desisted from using the Nintendo name in the amusement park is due to their
belief that physically-augmented reality and haptic-winch technology have applications that are
far beyond "Super Mario Bros". Complements in the market that interfere with volume sales of
Nintendo are mainly Sony and Microsoft. But the main reason why most people are fond of
purchasing Wii games instead of Microsoft and Sony is due to the fact that Wii games are more
family friendly. However, they have been making sales of Wii to decline due to their stiff
competition.

The positioning map below shows three products that are competing in high quality and
high priced segment. It is taken that since Nintendo Wii has been selling at a higher price than
Microsoft Xbox 360 and Sony PS3, it is overpricing. Since all these products are of high quality
and are priced highly, they will all lie in the same segment as shown in the map. Sony has been
competing with Nintendo especially by selling third-party titles while Microsoft is a strong
competitor as well.

Midterm exam 4

Q2. Create a positioning map. Your map must include the Nintendo Wii, Sony PlayStation
and Microsoft Xbox, and the target consumer segments you described in question 1.

Figure 1. A Hypothetical Product Positioning Map

Price(High)

Nintendo Wii (has all
consumer segments
since the product is
considered family
friendly)

Sony PS3(third party
titles)

Microsoft Xbox 360

Quality (Low)

Quality(High)

Price (Low)

As it can be deduced this map, the consumer segments want a game that is family
friendly, an all inclusive family game. Customers favor high quality consoles that have a unique
player interaction. This has been working for Nintendo. Since some segments (especially thirdparty
developers) are lately opting for PS3, there is a clear indication that a competitor may come
in to try and develop new consoles that are meeting the demand of the customer who are running
away from Wii (Reisinger, 2010, p. 1). Sony PS3 is next to Nintendo in the map since it is the
nearest or the most competitive compared to Microsoft.

Midterm exam 5

Q3. Describe Nintendo's Marketing Mix strategies for the Wii.

Wii's unique selling proposition that makes it different from other games is that it has a
unique controller. This controller is easy to use for all regardless of their age and skill. It is
possible to use any software that can allow the consumers to copy and burn games from one
program. This eliminates the stress of contending with given software. They also have the Wii
Fit Advanced. This is a product that took 5 years to be developed. Key to its success is the
unique player interaction.

Price

In 2006, the price of Nintendo Wii console in retail in United States was $249.99
(Sanders, 2006, p. 1). New Wii games would be charged $49.9 and this is $10 cheaper compared
to Xbox 360 titles (this price of Nintendo is for first-party games). Wii remote cost is $39.99,
classic controller ($20) and $19.99 for the nunchuck. As from last year, due to the decrease in
prices of games by Sony and Microsoft, Nintendo had to lower its prices up to $199.99. Their
pricing strategy is to sell every video game at the same price, like say $199.99. All other video
games produced will also sell at this price. It has always been very competitive. This has made
rivals to lower their prices.

Place

Wii is sold through the normal electrical retailers. However, its availability became an
issue after it was launched. This however worked in Nintendo's favor.

Promotion

Midterm exam 6

This being the final element of marketing mix, it may involve anything from where the
products are displayed to the targeted market. Due to its promotion strategy where it mostly
relies on the word of mouth to convince its consumers, many have ended up believing that
Nintendo has the most family friendly console. The major reason behind this perception is due its
console strategy of emphasizing its family-friendly and low cost games. 65% of its GameCube
games are "E-rated." Their aim in the market is to continue relying on their strategy of family
friendly products. This is evidenced in the launch of the new gaming system "Wii". This is a
word that is used in promotion to show that they want to continue creating games for everyone
since the word Wii is pronounced "We". Their goal is to bring people together. The double "ii"
in this console does not only stand for two people but it also stands for the two console
controllers. TV adverts are used to promote a "lifestyle" approach to gaming. It was because of
the shortage of consoles in 2007 that forced the company to use word of mouth in its
promotional efforts. The marketing budget of 2006 was over $200 million (Sliwinski, 2006, p.

1). In 2009, the budget was $6.5 million in UK alone while in North America it was estimated to
be $40 million.

Q4. (B). If you were the VP of Marketing for Sony, how would you respond to the
Wii?

If I were the vice president of Sony, I would respond to Wii by improving on the sales of
third party titles to beat Nintendo. This is because, even though Wii is the most popular console
in the current generation, it has a major blow as it's only its first-party titles that are selling on
the platform. Since there has been a clear indication that most third-party developers are opting
for PlayStation 3 instead of Wii, more resources should be invested in third-party titles instead.
Often, the best way to compete is to focus on the weaknesses of your competitor in order to
Midterm exam 7
exploit them for survival. Nintendo has a big problem in its distribution/supply since after
launching of Wii; many customers had to struggle to get their consoles. My supply/distribution
channels would be designed in such a way that all my target segments are supplied in time and in
the right quantity. Every customer segment must be provided with enough electronic retailers in
order to make sure that PS3 is the most available product. Moreover, Nintendo has a pricing
strategy that has allowed it to be the leader in the market. My strategy will be to lower the price
of my consoles so that they are not only available but also affordable. Nintendo uses a unique
player interaction. Copying what this competitor is doing and focus on doing better than them is
a great idea. Sony consoles will also be designed for all. Marketing will be comprehensive to
show the customers why they should buy from us. I will make sure all the electronic media is
used to surpass the word-of-mouth efforts applied by Nintendo.

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